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Please help me complete this, check my answers if wrong provide a solution so I understand, also which firm is riskier? F Firm A Firm

Please help me complete this, check my answers if wrong provide a solution so I understand, also which firm is riskier?image text in transcribed

F Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 700.00 280.00 202.00 4,000.00 600.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 7.00 4.00 2,400.00 600.00 0.25 Sales 700 units at 280 dollars Less Variable Costs (202 at 700 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 196,000.00 141,400.00 4,000.00 50,600.00 600.00 50,000.00 12,500.00 37,500.00 Sales 2000 units at 7 dollars Less Variable Costs (4 at 2000 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 14,000.00 8,000.00 2,400.00 3,600.00 600.00 3,000.00 750.00 2,250.00 Part 1 Using the Income Statements (above), compute the degree of operating leverage, degree of financial leverage, degree of combined leverage, and the break-even point in units for each firm. a. Degree of operating leverage 1.08 times 1.67 times b. Degree of financial leverage 1.01 times 1.20 times c. Degree of combined leverage 1.09 times 2.00 times d. Break-even point in units 51 units 800 units Part 2 Which firm is riskier? Why? F Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 700.00 280.00 202.00 4,000.00 600.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 7.00 4.00 2,400.00 600.00 0.25 Sales 700 units at 280 dollars Less Variable Costs (202 at 700 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 196,000.00 141,400.00 4,000.00 50,600.00 600.00 50,000.00 12,500.00 37,500.00 Sales 2000 units at 7 dollars Less Variable Costs (4 at 2000 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 14,000.00 8,000.00 2,400.00 3,600.00 600.00 3,000.00 750.00 2,250.00 Part 1 Using the Income Statements (above), compute the degree of operating leverage, degree of financial leverage, degree of combined leverage, and the break-even point in units for each firm. a. Degree of operating leverage 1.08 times 1.67 times b. Degree of financial leverage 1.01 times 1.20 times c. Degree of combined leverage 1.09 times 2.00 times d. Break-even point in units 51 units 800 units Part 2 Which firm is riskier? Why

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